CALGARY, Alberta (Reuters) - Canadian Natural Resources Ltd (CNQ.TO) (CNQ.N) made further cuts to its 2015 capital expenditure on Thursday and estimated a much lower 2016 spending budget, as oil prices show no signs of recovery.
Canada’s largest independent petroleum producer reduced its 2015 budget by an additional C$65 million ($49.4 million) to C$5.44 billion. It has now chopped a total C$3.2 billion from its original 2015 capital spending plan.
The Calgary, Alberta-based company said it expects to spend C$4.5 billion-C$5.0 billion in 2016 and will focus on squeezing costs further.
At its expanding Horizon oil sands project in Alberta, which will eventually produce more than 250,000 barrels per day, Canadian Natural Resources cut operating costs to C$27 a barrel in the third quarter, and lowered its 2015 cost guidance to a range of C$29 to C$32 a barrel.
North American oil and gas producers are slashing budgets, costs and streamlining operations as profits fall in the wake of the nearly 60 percent drop in oil prices CLc1 since June 2014.
Canadian Natural Resources said in September it would cut salaries by up to 10 percent for its staff in Calgary and Aberdeen, Scotland.
The company also has discussed spinning off royalty assets with the Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan and PrairieSky Royalty Ltd (PSK.TO), sources told Reuters last week. [nL1N12U2ML]
In a third-quarter earnings call, Canadian Natural Resources Chief Executive Steve Laut said the company would not rush to conclude a royalty deal this year.
“We are out here to get full value and maximize value for our royalty assets. If we can do that in 2015 we will, if we can’t get full value for the assets we won‘t. We are not going to be driven by timing,” Laut said.
Canadian Natural Resources cut its 2015 crude production forecast before royalties to 555,000–591,000 bpd from 562,000-602,000 bpd.
The company, which operates in Western Canada, the North Sea and offshore West Africa, said production before royalties rose 6.5 percent to 848,701 barrels of oil equivalent per day (boepd) in the third quarter. The average price fell 44 percent to C$33.46 per boe.
Canadian Natural Resources reported a net loss of C$111 million, or 10 Canadian cents per share, in the three months ended Sept. 30, compared with a profit of C$1.04 billion, or 94 Canadian cents per share, a year earlier. Excluding one-time items, it posted a profit of 10 Canadian cents per share.
The company’s shares were up 6.5 percent at C$34.00 on the Toronto Stock Exchange.
($1 = 1.31 Canadian dollars)
Reporting by Shubhankar Chakravorty in Bengaluru; Editing by Sriraj Kalluvila and Paul Simao